%2F 4-Part B(Ch 10-12) Help Save & Exit Submit The following information appies

Question

%2F 4-Part B(Ch 10-12) Help Save & Exit Submit The following information appies to the questions displayed below] Most Company has an opportunity to invest in one of two new projects. Project Y requires a $320,000 investment for new machinery with a four-year life and no salvage value. Project Z requires a $320,000 investment for new machinery with a three-year life and no salvage value. The two projects yield the following pr straight-ine d (Use appropriate factoris) from the tables provided.) annual results. The company uses and cash flows occur evenly t 5395,000 $316,e00 Direct materials Direct labor Overhead including depreciation Selling and administrative expenses 55,30 39,50 79,0 47,4 142,20 142,200 304,500 257,10 Total expenses Pretax incone Income taxes (3) Net income s 57,920 37,696 (Round each proj s net present value using 6% as the discount rate Assume that cash flows occur at each year-end your ere to search

Explanation / Answer

Project Y Year 0 1 2 3 4 NPV AW Initial Investment        -3,20,000 PAT              57,920        57,920            57,920        57,920 Depn              80,000        80,000            80,000        80,000 OCF          1,37,920     1,37,920        1,37,920     1,37,920 FCF        -3,20,000          1,37,920     1,37,920        1,37,920     1,37,920 Disc. Factor         0.943396    0.889996       0.839619    0.792094 3.465106 Disc. FCF        -3,20,000          1,30,113     1,22,748        1,15,800     1,09,246    1,57,907       45,571 Project Z Year 0 1 2 3 4 NPV AW Initial Investment        -3,20,000 PAT              37,696        37,696            37,696 Depn          1,06,667     1,06,667        1,06,667 OCF          1,44,363     1,44,363        1,44,363 FCF        -3,20,000          1,44,363     1,44,363        1,44,363 Disc. Factor         0.943396    0.889996       0.839619 2.673012 Disc. FCF        -3,20,000          1,36,191     1,28,482        1,21,210                  -          65,883       24,648 Project Y n= 4 i= 6% Select Chart Amount PV Factor Present Value OCF 137920    3.465106        4,77,907 Less: Initial Outflow       -3,20,000 NPV        1,57,907 Project Z n= 3 i= 6% Select Chart Amount PV Factor Present Value OCF          1,44,363    2.673012        3,85,883 Less: Initial Outflow       -3,20,000 NPV            65,883

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